by Bryce Edwards

27 May 2009

MP expenses and corruption in Mt Albert?

In light of the huge scandal in the UK over MP allowances, it’s worth looking at how politicians in New Zealand are misusing their parliamentary entitlements. While much of the British scandal has focused on the pecuniary gain of MPs, in this country it’s more likely that MPs and their political parties misuse their parliamentary allowances more for political gain – essentially converting parliamentary funds into a form of ‘backdoor state funding of political parties’. All the parties in Parliament have access to millions of dollars of taxpayer-funded resources and budgets that they use for party political electioneering. Of course this is especially the case when there’s an actual election going on – as there is currently with the Mt Albert by-election. Hence all the political parties in Parliament will be siphoning off taxpayer resources to Auckland at the moment. Therefore it has to be asked, are all the non-Auckland MPs that are currently flooding into the Mt Albert electorate, doing so via taxpayer funding? Is the Green candidate, and Wellington-based MP, Russel Norman really paying his own way to Auckland and finding his own accommodation during his campaigning? [Read more below]

There is a whole number of parliamentary resources that are probably being illegitimately put to use at the moment in the Mt Albert by-election. This blog post outlines some details of these resources, and then poses some questions of the parties currently campaigning in Mt Albert, before explaining why we never hear about how political parties use this backdoor state funding.

Travel expenses

All MPs are able to travel by air, taxi and rail within New Zealand for free. In the 2008/9 financial year, MPs have been budgeted to spend $11 million on travel. These resources are ‘entitlement-driven’ – meaning the budgets are uncapped and MPs can travel endlessly.

A full breakdown of the travel budget is no longer released. Prior to about 1998 the Parliamentary Service would provide a useful breakdown of the spending in categories such as taxi use, domestic flights, etc, but this proved too embarrassing and is no longer done. Figures also used to be supplied for the travel budgets of each political party and MP, but this too seems to have been too embarrassing and it seems that this informative practice has since also stopped.

MPs travel frequently throughout the country speaking to meetings held by their party organisations. Its all part of the ‘permanent campaign’. MPs even use their parliamentary travel budgets to go to their own party conferences. For example the Green Party is holding its annual conference this weekend in Dunedin, and while this in no way amounts to any sort of ‘parliamentary business’, all nine Green MPs are likely to be travelling to the conference courtesy of the taxpayer. (In fact, for the weeks preceding the conference, Green Party parliamentary staff will have been working on organising the conference). And of course during general elections, MPs – especially list MPs campaigning to increase the nationwide party vote – travel up and down the length of New Zealand campaigning with free travel expenses.

A member may be reimbursed for actual and reasonable expenses incurred by the member while engaged on parliamentary business in respect of accommodation outside the Wellington commuting area.

The rates are $160 per night (or $180 per night in Auckland), and can only be spent in commercial accommodation.

Little light is ever thrown on the use of this MP expense – despite it being one that is very clearly used for party political activity rather than parliamentary activity. One example of the misuse being questioned was when former Act Party list MP Donna Awatere Huata was investigated by the Serious Fraud Office in 2001 for spent 35 days during the 1999 election campaign in the Auckland Central electorate, for which she was the Act candidate, and claimed the parliamentary away-from-parliament allowance. Awatere Huata denied that she was in the electorate on party business despite it occurring during the election campaign! The then General Manager of the Parliamentary Service, John O’Sullivan, thought the misuse was so blatant that he passed his concerns onto the Auditor-General, who also thought the problem warranted a proper investigation and got the Serious Fraud Office to investigate (although in the end no criminal charges were bought).

The out-of-parliament electorate allowances

The parliamentary parties are provided with very generous budgets to run out-of-parliament operations, which normally means operating an office in their electorate. Therefore, regional party organisers (previously paid for by the party organisation) have been replaced by Electorate Agents (paid for by the Parliamentary Service), and the electorate offices are now de facto regional party headquarters. This was an issue noted by National Party stalwart John Jensen in a 1999 newspaper article:

Have you recently visited your local Alliance office? The Green Party headquarters? How about the Act office in your electorate? Or a meeting place for New Zealand First? How many New Zealand First party activists do you know in your suburb? The contact for Act in the Hamilton phone book is the electorate office maintained by the taxpayers for list MP Ken Shirley in Tauranga. And so it goes on. The minor parties run on a shoestring, with much – if not most – of their activity operated out of the offices of their MPs (Jensen, 21 Jan 1999).

It is an open secret in Parliament that these taxpayer-funded electorate offices operate as party offices geared to organising the party locally, and working for either the re-election of their MP or an increase in the local party vote. At the most obvious level this can be seen in the offices being painted and branded as party offices, complete with party colours and logos.

The Act party, in particular, has made good use of out-of-Parliament staff for organising and marketing itself. A minor scandal in 2003 over Act’s electorate office funding revealed that its parliamentary researchers and press secretaries often work on split contracts, being paid to do most of their work as out-of-Parliament support staff. For example, under this arrangement, Act’s head of research, ex-Cabinet Minister Peter McCardle, was supposed to be an electorate agent for 32 hours a week – ostensibly working out of Richard Prebble’s Pipitea St house in Wellington – and also a researcher working in Parliament for only eight hours a week. Act’s out-of-Parliament funding of about $400,000 per annum was supposed to be used by its MPs to service the electorate, yet media reports suggested this money was really paying for political research and marketing.

Outside Parliament, the MPs’ offices and their electorate agents are supposed to work not as party members, but to help constituents with whatever local problems or issues they have – much like a high-powered Citizens’ Advice Bureau. This arrangement is good for the public but, as Act figured out, it is not an effective vote-winning use of state funding, and the party was better off using that money for more political tasks, as it does in Parliament.

The Green Party has also made effective use of its out-of-Parliament staffing allocations, rejecting standard constituency work in favour of organising Green Party political campaigns. For instance, in 2002 the party employed a ‘cannabis law reform co-ordinator’ from its out-of-Parliament budget. A Green spokesperson described the job as ‘promoting or co-ordinating and researching work’ on drug law reform (quoted in NZPA, 31 Oct 2002). The party said it was also looking to employ ‘up to six other policy co-ordinators including in the areas of safe food, ground-based pest control, sustainable agriculture, and social and economic justice’ (NZPA, 2002j). Despite such work centring on policy and research instead of constituents, the Parliamentary Service said that the position was ‘a sensible use of the money because the party was an issues-based party of list MPs rather than constituency MPs’ (ibid).

It seems that today, more than ever before, the role played by all MPs in the community is party-political, and all the taxpayer-funded resources associated with their role are being directed to such ends.

Parliamentary staff and resources

The parliamentary parties receive resources and services of more than $128m a year just from being in Parliament. These are intended to permit them to carry out their legislative duties and serve their constituents, yet much of this is used for partisan political purposes, electioneering and organising their parties. About 1200 staff are employed by the Ministerial and Parliamentary Services, many of whom carry out party political research, marketing and organising. In the last financial year, Parliamentary Service spent $17m on just executive secretaries for MPs. Other money spent included $2m on telecommunications and $13m on computing and other information services (Government of New Zealand 2008, pp.243-244).

The professionals employed within the parties in Parliament are clearly working for the re-election of their various parties throughout the parliamentary cycle. But this is most blatantly the case in the run up to general- and by-elections, when according to the 1990s research of Grant Klinkum, the state pays for staff to travel to electorates for support work, undertake polling work for the electorates, assist in drawing up party platforms, service joint parliamentary party/extra-parliamentary party campaign committees and support candidates who are not MPs (Klinkum, 1998b: p.427). In the 2008-09 financial year the parliamentary parties in Parliament had multi-million dollar budgets available to them under the official category of ‘Party and Members Support’ – funds totaling $15,838,000 (Government of New Zealand, 2008, pp.243-244). This money is used for hiring specialist staff, publishing, postage, and other political communications.

Mt Albert corruption

In Mt Albert there are currently a large number of MPs flooding into the electorate to campaign on behalf of their respective candidates. So far, many of these have been non-Auckland MPs, and therefore likely to be using Parliamentary Service funds to be there.

The one particular non-Auckland MP that appears to have been there the most has been Wellington-based MP Russel Norman – in fact Norman is the only non-Auckland MP running in the electorate. While there is nothing particularly wrong with carpetbagging per se – a ‘term is sometimes used derisively to refer to a politician who runs for public office in an area in which he or she is not originally from and/or has only lived for a very short time’ – most people would in fact have a problem with such carpetbagging being funded by taxpayers. It is therefore Norman that should be the most upfront about who’s paying his way.

There’s another reason that Russel Norman should be called to account for his election spending. More than any other politician – other than perhaps Winston Peters – Norman has been the most populist campaigner on issues of ‘money in politics’. He probably pushed harder than any other for the Electoral Finance Act – even though it proved to be a spectacular ‘own goal’ – and has continued to be the most sanctimonious MP (since Peters) about transparency. He’s probably made more allegations against other MPs and parties than anyone (again, except Winston Peters).

Thus this stone-thrower needs to show that he doesn’t also live in a glass house. Therefore Norman should declare whether he has used any taxpayer funds on his campaign, including travel expenses and accommodation claims for his many, many trips to Mt Albert since Helen Clark announced her departure from Parliament. Anything less than this would make his various campaigns against ‘corruption’ seem rather hollow.

Likewise, the other parliamentary parties need to be more upfront about their use of backdoor state funding and MP expenses in their campaigns. Labour needs to show that it has learnt its lessons over the EFA and its pledge card. What about Trevor Mallard, who was recently blogging about his experience on the campaign trail? There seem to be a lot of non-Auckland MPs in Mt Albert recently. Unless they are paying their own way, or legitimately and genuinely in Auckland on other business, their use of tax-payer funding to campaign could be classified as ‘corrupt’. And National and the other parties should also declare how they are paying to send MPs into the electorate to campaign.

It’s in by-elections, particularly, that parties use their parliamentary resources for campaigning. Matt McCarten, formerly of the Alliance, is a veteran of a number of such campaigns, and he has argued that only parties with parliamentary resources can afford to compete effectively in by-elections. Certainly when the Alliance was in Parliament it threw every parliamentary resource that it could into fighting by-elections. Parliamentary staff were directed to aid the effort. Jim Anderton even sent MPs’ executive secretaries from Parliament to work for weeks on the campaigns, adopting all sorts of mechanisms to hide the rort.

The media should be applying the heat and asking questions. This has occasionally happened in the past. In 1998, for instance, in the Taranaki-King Country by-election of 1998, Brent Edwards reported in the Evening Post that parties were ‘spending thousands of dollars of taxpayer money to run their by-election campaigns’ mainly by sending their MPs to the electorate to campaign. These MPs’ travel, accommodation, expenses and salary were paid for by the state (Edwards, 1998). Edwards listed many of the Labour, Act and National MPs that were campaigning in the electorate. It appears that little has changed since then, but there isn’t much media attention on the issue.

Many of these resources should form part of the declared candidate’s expenditure. So it’d be interesting to check their returns eventually. Arguably Russel Norman should really be declaring the receipt of donations from the Parliamentary Service too – if in fact he is using Parliamentary Service resources to be in Auckland. Back in 1998, Chief Electoral Officer Phil Whelan said that ‘Spending taxpayer money on flying MPs in and out of the electorate was a "grey area" and could be challenged if anyone made a formal complaint about the issue’ (Edwards, 1998).

A parliamentary cartel

A large part of the reason that the misuse of parliamentary resources in general and by-elections is not uncovered or debated is because all the parliamentary parties are essentially in cahoots to keep the issue off the agenda. As one recent Parliamentary Service manager put it, ‘The present system relies heavily on the Parliamentary parties voluntarily complying with the rules, i.e. on trust’ (O’Sullivan, 2001: p.6). But the parties each keep quiet about their own resources – as they clearly all benefit from the existing arrangements. This situation means there is no political capital to be gained from exposing the whole system of funding.

Other authorities tend to go along with the cartel arrangement. For example, when Social Credit MP Bruce Beetham asked the Auditor-General to inquire into the possible misuse of taxpayer funds by Labour MPs who used travel privileges to canvass in the Nelson by-election of 1969, apparently according to Klinkum ‘The Auditor General refused to do so on the basis that a special parliamentary committee set the rules and that providing no one side was doing things the other side was not able to do then there was not a problem’ (Klinkum, 1998: p.217). Although obviously the current Auditer-General is less inclined to see things through this old cartel prism, this is still the way things are viewed throughout the parliamentary complex.

The use of parliamentary resources for party activities is also perpetuated by the fact that National and Labour have ensured the Parliamentary Service is exempt from the Official Information Act. This means that information about the parties’ use of state funds is generally not available to the public. According to Vernon Small, ‘None of its meetings are open to the public, its agenda is not released and the Official Information Act (OIA) does not apply to it – and that is the way most MPs like it. Ironically, the only people with routine access to the darkest secrets about individual members – which insiders say is rare in any case – are representatives of rival parties. It is this "mutually assured destruction" that keeps much of what it does secret’ (Small, 2001a). Gathering material for my research on political finance has proved very difficult, as there are very few sources of information on the parliamentary resources. But as in the UK, there will soon be a growing public demand for public accountability for the millions of dollars of party and MP expenses that are utilized but hidden from the view of voters.

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MP expenses and corruption in Mt Albert?

In light of the huge scandal in the UK over MP allowances, it’s worth looking at how politicians in New Zealand are misusing their parliamentary entitlements. While much of the British scandal has focused on the pecuniary gain of MPs, in this country it’s more likely that MPs and their political parties misuse their parliamentary allowances more for political gain – essentially converting parliamentary funds into a form of ‘backdoor state funding of political parties’. All the parties in Parliament have access to millions of dollars of taxpayer-funded resources and budgets that they use for party political electioneering. Of course this is especially the case when there’s an actual election going on – as there is currently with the Mt Albert by-election. Hence all the political parties in Parliament will be siphoning off taxpayer resources to Auckland at the moment. Therefore it has to be asked, are all the non-Auckland MPs that are currently flooding into the Mt Albert electorate, doing so via taxpayer funding? Is the Green candidate, and Wellington-based MP, Russel Norman really paying his own way to Auckland and finding his own accommodation during his campaigning? [Read more below]